Akebono Brake Industry Co. (7238), a Japanese auto-parts maker that counts General Motors Co. (GM) as its biggest customer, is increasing its bet that U.S. auto industry expansion will fuel a revival of earnings growth.
The brake supplier to GM, Ford Motor Co. and Nissan Motor Co. will spend about 7 billion yen ($71 million) this year and 3 billion yen next year to expand in North America, its biggest market, Akebono President Hisataka Nobumoto said in an interview. That compares with 6 billion yen last year.
Akebono, which paid $19 million for Robert Bosch GmbH’s North American brake unit in 2009, is expanding output of rotors at its Clarksville, Tennessee, factory as the U.S. auto industry heads for its best sales year since 2007. Nobumoto said he expects a revival in earnings growth after rising demand allowed the company to boost parts prices in the U.S.
“We can expect demand in the U.S. to continue to stay strong for the next year or two,” Nobumoto, 64, said last week at the company’s Tokyo headquarters office.
GM accounted for about 24 percent of the Tokyo-based company’s revenue in the year ended March. Led by demand for its pickup trucks, Detroit-based GM has boosted sales 9 percent this year, according to industry researcher Autodata Corp.
Akebono plunged as much as 10 percent on July 31, a day after reporting profit fell in the first quarter. The shares fell 1.2 percent to 418 yen, the lowest since April 4, at the close in Tokyo trading today, compared with a 1.4 percent gain in the benchmark Nikkei 225 Stock Average.
Given the rebound in the U.S. auto market, we had expected a better first quarter, Nobumoto said.
Net income will probably increase almost fivefold to 2.5 billion yen in the year ending March 2014, the company forecasts. Profit dropped 48 percent from a year earlier to 478 million yen in the three months ended June 30, as prices for some parts in the U.S. were below cost.
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